David Walker: Labour's bonfire of contracting could do untold harm to charities

29 September 2017

Will 'public by default' be read as 'social by default' and included charities and mutuals as well as the public sector, asks our guest columnist

Labour's Brighton conference

Labour surfaces from its annual conference committed, more or less, to repealing a chunk of the Private Finance Initiative and a thoroughgoing review of outsourcing by councils and other public bodies. That’s bad news for companies, but there’s also a risk that the third sector will get hit by the flak as Team Corbyn opens fire on contracting.

The third sector got scant airtime at the Brighton jamboree, but pledges now being made by Labour on public services carry deep implications for charities and voluntary organisations, especially those that partner with profit-making firms or are themselves contracted by councils and government agencies. At a minimum, Labour is now set to revisit contracts for probation, benefits and work capability assessment in policing and prisons, and to exclude the private sector.

The shadow home secretary, Diane Abbott, lumped together privatisation and outsourcing as responsible for the Grenfell Tower disaster. She presumably meant arm’s-length management organisations. Labour activists would probably also include joint ventures and partnerships and would not necessarily make a fine distinction between arrangements with firms and those with non-profits.

Of course, Labour would have to win the next election for any of this to matter, and it has yet to establish a consistent, let alone a commanding lead in the national opinion polls. And as things stand, the next election might not be until 2022. But you don’t have to be a worshipper at the shrine to accept the possibility of a Labour government. And it looks like Labour’s public service policies are now being set without much if any input from the charity sector.

Would the "detailed implementation manuals" that the shadow chancellor John McDonnell is putting together make a fine distinction between good outsourcing (to the third sector) and bad? It’s true that he is looking to the likes of Lord Bob Kerslake for advice. The former head of the civil service is chair of the housing provider Peabody and a vocal advocate of charities. But Labour is likely to commit to "public by default" in procuring services, and who will ensure that is understood as "social by default", to include charities and mutuals as well as the public sector?

Andrew Gwynne, the shadow communities secretary, promised to increase council powers in order to end outsourcing of work that removes public accountability, which could well include contracts let to third-sector organisations. Some councillors might think charities and non-profits also bear some responsibility for, as Gwynne put it, "hollowing out of council capacity". The services that Labour councils could deliver better and more efficiently in-house, as Labour would have it, include social care, child protection and other domains where the third sector has become an important supplier to local authorities.

A Corbyn government looks unlikely to breathe life into the social value act. It would rethink commissioning, yes, but not in order to expand it. Dan Corry, chief executive of the think tank NPC, laid into "stupid procurement policies" that shut out charities, but the signs are that a future Labour government is going to prefer, if not insist upon, in-house supply.

Around the fringes of the conference, you heard support in principle for the third sector: Barbara Young spoke up; Chuka Umunna and other MPs remain supportive; Corbyn will go on being a keen visitor to charity projects. With the prospect of power, Seumas Milne and other key advisers are becoming increasing pragmatic, which could mean they won’t want to offend.

But third sector leaders who might take a lesson from what has been happening to party thinking about local government aren’t alone in seeking answers. Labour made major commitments on public spending and extending public services, yet its councillors left the conference somewhat dazed and confused.

Gwynne talked about a "renaissance" and legislation to give councils greater powers to deliver services (along with fair-wages clauses, which again could have unintended consequences for third-sector contractors). But on the platform and around the fringes of the conference, speakers insisted that councils would have to toe the line: they would be told to do this and required to do that. The next Labour government, on present evidence, is not going to be noticeably "localist". Councillors would deliver what a Corbyn government ordered. Charities, too?

David Walker is the author, with Polly Toynbee, of Dismembered, recently published by Faber

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